Chicago Spire project takes loan from RMW

CHICAGO -- The owner of a Chicago property intended as the site for
North America’s tallest building decided to take a $1 million loan from
secured lender RMW Acquisition Co. rather than proceed with bankruptcy
court approval of an agreement for Atlas Apartment Holdings LLC to
invest as much as $135 million.

RMW, an
affiliate of Stephen Ross’s real estate company Related Cos., objected
to the agreement, calling it “illusory and a sham.” Rather than
guaranteeing completion of the so- called Chicago Spire, RMW said it was
a “vague, uncommitted, unfunded and discretionary agreement by Atlas to
spend up to five months doing due diligence on a dormant single-asset
real estate project.”

RMW and
other creditors began the case by filing an involuntary bankruptcy in
Delaware in October against the owner of the 2.2-acre Chicago parcel,
Shelbourne North Water Street LP. In November, Shelbourne consented to
being in Chapter 11 and transferring the bankruptcy to Chicago, while
gaining the exclusive right until March 10 to file a reorganization
plan.

In addition
to the investment, Atlas offered to sponsor a Chapter 11 plan paying
creditors in full. At last week’s hearing to approve the accord, the
owner decided instead to take financing from RMW, according to court
records.

On an
interim basis, the bankruptcy court approved a $75,000 loan to be used
exclusively by a receiver to maintain the property. After a March 11
hearing, the loan can increase to $1 million, again only for use in
preserving the property.

RMW argued
that the Atlas agreement was highly conditional and required obtaining a
$100 million loan from a third party. In addition, Atlas would receive
$750,000 to cover expenses of a financial investigation and had the
right to terminate the agreement at its discretion within three months.

The Chicago
Spire, which was to be built by Irish developer Garrett Kelleher and
designed by Spanish architect Santiago Calatrava, was originally
envisioned as rising 2,000 feet (610 meters). So far, the 150-story
helix-shaped residential project is a hole in the ground.

RMW and the other creditors who started the involuntary bankruptcy said they have $82 million in claims.

Shelbourne
borrowed $54.5 million from Anglo Irish Bank Corp. in 2006 to buy the
property. The loan was increased to $69.5 million in 2008 and went into
default by October 2009. RMW acquired the loan in June from National
Asset Loan Management Ltd., which was created to liquidate Anglo Irish
Bank.

The case is
In re Shelbourne North Water Street LP, 13- bk-44315, U.S. Bankruptcy
Court, Northern District of Illinois (Chicago).